The US$6.3 million lawsuit filed by Deutsche Bank against Industrial and Commercial Bank of China (ICBC) executive Zhang Hongli will hurt the German lender's long-term relationship with the mainland bank, people who worked at Deutsche Bank at the same time as Zhang said.

Zhang's mainland connections were instrumental to the German bank in setting up its mainland presence, sources said.

Under Zhang's leadership, Deutsche Bank partnered with ICBC in 2005 in offering investment banking services on the mainland. In 2006, Deutsche Bank became a book runner for ICBC's US$19 billion initial public offering in Hong Kong, the world's largest at the time.

Deutsche Bank's lawsuit alleges that Zhang breached his fiduciary responsibility by transferring US$3.9 million to an offshore company held by his relative without approval. The bank has now offered Zhang an out-of-court settlement, demanding that he pay back the transferred amount but forgoing accumulated interest of US$2.3 million.

"Things have gone wrong," a person who worked with Zhang at Deutsche Bank said of the German lender's once-tight relationship with ICBC. "This will hamper their business with ICBC in the future."

The suit would not likely provoke mainland regulators, however, as it was directed at an individual, not the bank, the person said.

Zhang is a senior executive vice-president at ICBC, the world's largest bank by market capitalisation, and held top roles at Deutsche Bank such as chairman of its China operations and head of global banking in Asia between 2001 and 2010.

Zhang was the first senior executive at a foreign bank to move to a top position at a mainland state bank.

People that spoke to the Post credited Zhang with Deutsche Bank's expansion on the mainland.

"He kind of put Deutsche on the map in China," one person, who worked at the German bank at the same time as Zhang, said. "He was always known as being well connected with lots of [communist] party contacts."

Senior executives at mainland state banks are often Communist Party members. Lending at the mainland's biggest banks is largely directed by the government and has for decades catered mainly to the financing needs of state-owned companies.

Zhang's lawyer has previously told Caixin Media that Zhang had complied with regulations and the law during his time at Deutsche Bank.

Deutsche Bank declined to comment.

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